Why Liability Maneuvers Fail: Judge Kaplan on Spirit Airlines, Rite Aid, and Overleveraged Giants
In this episode, we sit down with Hon. Michael B. Kaplan of the District of New Jersey to go inside the rarely seen world of bankruptcy from the judge’s chair. Drawing on years of overseeing high-profile Chapter 11s and small consumer cases, Judge Kaplan talks through what actually happens in those “first day” hearings, why so many liability management deals and quick restructurings fall short, and how often operational problems get ignored in favor of balance-sheet fixes. The conversation explores the human side of the work: what it’s like to carry the weight of decisions that affect jobs, communities, and families, and the tension between what feels fair and what the Bankruptcy Code demands. Judge Kaplan also reflects on how the practice has evolved with private equity, private credit, rising fees, and faster timelines, and what those shifts mean for the future of Chapter 11.
🎧 Episode Highlights
[03:02]: The high stakes of decisions that reshape lives and companies
[05:08]: “How can I help?:” as his courtroom philosophy
[08:55]: Why liability management deals often fail struggling companies
[13:40]: The human toll of foreclosures, evictions, and underwater homes
[17:33]: How Chapter 11 shifted from reorganization to runway extension
🔑 Key Takeaways:
-Bankruptcy, in Judge Kaplan’s view, is fundamentally a problem‑solving arena rather than a ritual of failure. He emphasizes that judges sit at the crossroads of law, business, and human impact, making rapid decisions that can determine whether companies survive, liquidate, or quietly wind down. The stakes are measured not only in dollars, but in jobs, homes, and entire communities that live with the consequences of each ruling.
-Many high-profile restructurings fail because they treat Chapter 11 as a way to “extend the runway” instead of fixing the underlying business. Judge Kaplan sees too many liability management exercises and quick, milestone-driven cases that focus on capital structures and buzzword excuses—COVID, interest rates, tariffs—while ignoring core operational issues like broken business models, footprints, labor costs, and management failures. Without confronting those realities, he argues, even the most sophisticated financial engineering simply delays an inevitable collapse.
-Great outcomes in bankruptcy depend on the quality and mindset of the professionals in the room. Judge Kaplan looks for counsel, CROs, and advisors who truly understand the business, manage client expectations, listen to the court’s questions, and can translate complex financial and operational stories into clear evidence. Reputation, preparation, and candor matter: the best practitioners help the judge make informed decisions, while recognizing that the law, not personal preference, ultimately constrains what “fair” can look like in any given case.
👤 Guest Spotlight:
Hon. Michael B. KaplanHon.
Michael B. Kaplan is a United States Bankruptcy Judge for the District of New Jersey and a former chief judge of the court, with decades of experience deciding some of the nation’s most complex restructurings and liquidations. Before taking the bench, he served as a practitioner and Chapter 7 and 13 trustee, giving him a ground-level view of both business reorganizations and consumer financial distress. Known for his practical, problem‑solving approach, Judge Kaplan has presided over high-profile Chapter 11 cases while remaining deeply attuned to the human impact of foreclosures, evictions, and failed turnarounds on ordinary people.
Stay Connected:
Produced by Speakerbox Media.
